Peter Todd on Why Altcoins with Faster Confirmations Miss the Point
One of the first issues people usually bring up when they learn about Bitcoin is the ten minute confirmation time. Although transactions are broadcast to the network instantly, they are only confirmed into the blockchain every ten minutes (on average). Some users see this as a serious issue for mass adoption. For example, you don’t want to wait ten minutes (or longer) for a transaction to confirm when all you’re doing is buying your morning coffee at Starbucks.
After taking notice of the frustration confirmation times have caused some Bitcoin users, altcoin developers lowered the amount of time it takes for transactions to confirm on their respective networks. While this was one of the main selling points made by early altcoin developers, such as Litecoin’s Charlie Lee, others have stated such alterations to the Bitcoin protocol miss the point. Bitcoin Core Developer Peter Todd is one such individual who finds confirmation times to be an overblown topic.
Lower Confirmation Time Means Lower Security
Todd was asked about the topic of altcoins with shorter confirmation times at the Anarchapulco Conference earlier this year, and he seemed to have a few issues with alternative blockschain that were created for that sole purpose. He noted that confirmation times are directly linked to the overall security of a cryptocurrency, which makes them a “pretty silly thing” to tweak:
“I think faster confirmations is a pretty silly thing to be doing because confirmations times [are] a tradeoff between the security of your coin and also convenience. The altcoins that try to push this down to, say, 1 minute 30 seconds — they’re making their coins much less secure because it now means if you’re a mining pool with more hashing power, you earn proportionally more money than if you’re a smaller pool. That difference becomes more and more extreme as the block age role gets smaller and smaller and your proximity to other miners, as well as your size, becomes more and more important for your profitability.”
Does Pushing It Down to One Minute Even Help?
Peter Todd also made a point on the usefulness of lower confirmation times that many others have made in the past. In reality, a move from ten minutes to a one minute confirmation time doesn’t help all that much because people really just want five second confirmations:
“Ten minutes is a very conservative number — and equally like one minute. One minute is still a long time to wait for most applications. If I’m trying to go pay in bitcoins for a donut, the cashier wants me to get out of there in like five seconds; they don’t want to wait that long. Yet, five seconds will never be something that Bitcoin can guarantee, [nor] any system like it.”
Decentralized Systems Need Time to Come to Consensus
Lastly, Todd was asked about Dash’s instant transactions feature. He seemed generally dismissive of the entire concept:
“I guarantee you Dash’s instant transactions is going to end up broken some time. We’re not going to see it — probably because nobody actually uses it. But, you just can’t have a decentralized system that comes to consensus that fast. It’s not going to happen.”
Todd also shared his overall thoughts on Dash via Twitter a few months after his interview at Anarchapulco:
— Peter Todd (@petertoddbtc) July 17, 2015
Although altcoins are still a rather prevalent part of the Bitcoin ecosystem in 2015, their existence continues to puzzle many of the most well-respected developers in the space. Some members of the community still see them as viable alternatives to Bitcoin, but the majority view them as nothing more than casinos or testnets.